THE GROWTH OF DISABILITY INSURANCE

September 13, 2006

The rapid growth of enrollment in Social Security Disability Insurance (DI) during the past two decades appears poised to continue and even accelerate as baby boomers attain their peak disability years, say authors David H. Autor and Mark G. Duggan in the Journal of Economic Perspectives.

But DI growth -- which will reach more than 6 percent of the nonelderly U.S. adult population in the next decade and account for more than 8 percent of the federal budget -- does not appear to be explained by a true rise in the incidence of disabling illness, say the authors, but rather by policies that increased the subjectivity and permeability of the disability screening process.

Despite the growing obstacles, there are ways to help stem the rapid expansion, say the authors:

Shorten the average length of time that claimants receive benefits by encouraging faster exit.

Tighten the screening process so that fewer insured workers may qualify.

Reduce the incentives for qualified workers to seek benefits.

Yet even with these measures, stopping the rising costs of DI will not be easy, especially since the disabled are generally held in high regard by the public, say the authors. But with the present value of new DI awards and accompanying Medicare coverage now exceeding $200 billion per year, and rising, the cost of postponing reforms may eventually come to appear even more daunting than the cost of facing them promptly.

Source: David H. Autor and Mark G. Duggan, "The Growth in the Social Security Disability Rolls: A Fiscal Crisis Unfolding," Journal of Economic Perspectives, Summer 2006.